M-Pesa-linked solar dealer, M-Kopa, will from April begin sharing information on loan defaulters with credit reference bureaus to arrest the rising number of non-payers.
The firm has issued a notice saying it plans to share information on how customers pay for their M-Kopa solar kits, in a move that will see defaulters blacklisted by lenders.
M-Kopa is a pay-as-you-go solar scheme where users begin using a solar kit by paying a deposit, a daily fee of Sh40 per day via M-Pesa to access the solar-powered lamps and own the property after a year.
“M-Kopa Kenya Ltd has now been approved by the Central Bank of Kenya to submit full file information to credit reference bureaus and begin submitting repayment information on all borrowers from March 31, 2015,” the company said in a notice.
“Non-performing loans— unpaid for 90 days and above —will be adversely listed,” M-Kopa said.
M-Kopa, founded in 2011, has already connected 150,000 Kenyan homes to solar kits.
Buyers pay Sh2,999 upfront and then settle the balance in daily installments of Sh40 via M-Pesa for a year, bringing the overall cost to about Sh17,599.
The solar lamps are programmed in such a way that they automatically switch off whenever customers default on the daily payments. The start-up provides a solar power system that consists of a panel, three lamps, radio and mobile phone charging kit.
M-Kopa now joins other utility providers such as Kenya Power and water service boards which have taken to credit reference bureaus to list those who default on paying their bills.
Financial sector players such as banks, micro-finance institutions, credit providers, Higher Education Loans Board as well as saccos have already embraced listing of defaulters and good creditors.
M-Kopa is the brainchild of Jesse Moore, Chad Larson and Nick Hughes —who helped develop M-Pesa, which has more than 19 million users in Kenya.
M-Pesa has spawned imitators in many countries and Mr Hughes wants to apply the same thinking to lighting.
Daily payments for M-Kopa, a credit-based solar lamp that is topped up through the M-Pesa service, have risen to above 10,000 making it Safaricom’s second biggest pay-bill customer after Kenya Power. Safaricom earns undisclosed fee for every deal.
M-Kopa said the penetration of solar energy use in Africa was still very low and expects its products to enable low income population, especially in rural areas, to access affordable home lighting.